PDF Inter IKEA Group Financial Summary

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Inter IKEA Group Financial Summary FY16

Red Dot Awards

The unique LISABO table leg connection dowel cuts assembly time by 80%.

Pick up and order

There are 44 IKEA pick-up and order points around the world. Order online, then pick up your order nearby. Or order on the spot!

The IKEA vision is to create a better everyday life for the many people. IKEA is one brand represented by many companies and many people all over the world. Together we make our vision come to life.

FY16 has been a busy year for IKEA. Retail sales exceeded 36.4 billion euros, 14 new stores opened their doors, and we simplified the IKEA franchise system to improve customer focus and our ability to grow.

People visited the 389 IKEA stores in 48 countries more than 915 million times. The IKEA website had a record year with 2.1 billion visits. To further improve the customer experience we have invested in e-commerce and new ways to make shopping, browsing and getting inspired easier. One example is our new pick-up and order points. Customers can

order online, then pick their products up somewhere nearby. Or place an order in one of the stores or pick-up and order points with help from a co-worker.

We're also investing in the IKEA product range. We've developed new collections in collaboration with some of the world's foremost designers. This includes Tom Dixon, Walter van Beirendonck and Danish Design Brand Hay. We also constantly strive to minimise the amount of resources used to reduce our environmental impact. Together with our biggest textile supplier, we have recently introduced a new fibre dyeing technique that reduces water consumption by 80%. And we're constantly experimenting with new materials. We may soon offer sofas and chairs made from paper, and bench tops and table legs made from bamboo.

We're humbled that people have recognised our efforts. For example, IKEA products won three Red Dot Design Awards in 2016.

One of the focus areas in IKEA this year was food, which is a key part of our offer. In 2016, the newlyadded veggie ball contributed to 30% sales growth

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Financial Summary FY16

Veggie balls

A portion of 10 IKEA veggie balls includes 30% of your daily recommended fibre intake.

Collaborate

The GL?DANDE limited edition collection consisting of pre-cut fabrics, stationery, shopping bags, rugs, porcelain and pillows was co-created with Belgian designer, Walter van Beirendonck.

in the meatball family range, which also includes chicken balls and traditional meatballs. They've since become a customer favourite. In addition, the IKEA seafood range achieved ASC and MSC certification.

IKEA continues to expand on existing and new markets. In 2016 the first IKEA store opened in Zenata, Morocco, and new IKEA stores will soon open in Serbia, India and the Philippines. Yet on most IKEA markets the IKEA presence is limited, and in most countries IKEA is not even present.

To continue to develop IKEA in a rapidly changing retail environment, we decided to simplify and improve the IKEA franchise system. This will help us create even stronger customer focus and create better conditions for future expansion and growth. For many years, range and supply activities have been outsourced to the INGKA Group, the largest IKEA franchisee. During FY16 the new Inter IKEA Group decided to insource these assignments and acquired related companies and IKEA industrial companies for 5.3 billion euros.

This is a summary of the new Inter IKEA Group's Annual Report. To learn more about IKEA activities, visit IKEA Highlights at . There you'll find stories from the many companies behind the IKEA Brand.

IKEA people define success by our ability to live up to the IKEA vision. We have been successful in reaching people and making the IKEA Brand known and loved by many people across the world. We have been inspired by people's everyday lives at home and people have, in return, been inspired by our ideas, our solutions, our products, our catalogue, our website and our stores.

I am proud of the work all 183,000 IKEA people around the world have done this year. It's their passion and commitment that truly brings the IKEA vision to life. We've accomplished a lot this year, but there's plenty left to do.

As IKEA founder Ingvar Kamprad once said, "Most things remain to be done".

Torbj?rn L??f

CEO Inter IKEA Group

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Financial Summary FY16

IKEA? ? one vision, one brand, many companies and many people

389

IKEA stores worldwide

915

IKEA store visits in millions

2.1

IKEA website visits in billions

36.4

IKEA retail sales in billion Euros

54

stores in North America

1

store in the Caribbean

New IKEA store in 2016 New IKEA store in new country: Morocco

268

stores in Europe

13

stores in the Middle East and North Africa

183

IKEA co-workers in thousands

44

stores in Asia

1.3

9

stores in Australia

Million kitchens sold worldwide

The IKEA franchise system was developed to secure the IKEA vision, to create a better everyday life for the many people, and the IKEA business idea, to offer a wide range of well-designed, functional home furnishing products at

prices so low that as many people as possible will be able to afford them. In 1983, Inter IKEA Systems B.V. was established and started to develop the IKEA Concept, and is the worldwide franchisor. For the rights to use the IKEA systems, methods and

trademarks, every IKEA franchisee pays a franchise fee to Inter IKEA Systems B.V. As of 31 August 2016 there were 13 franchisees operating 389 stores in 48 countries.

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Financial Summary FY16

13

Franchisees

43

Factories owned by IKEA Industry

25

Purchasing offices

978

Suppliers in 50 countries

Inter IKEA Group

The IKEA Concept is built upon the IKEA way of designing, developing, producing and distributing the IKEA product range. These activities had historically been assigned to the INGKA Group through various agreements. On 31 August 2016, Inter IKEA Holding B.V. acquired the companies working under these agreements in order to strengthen the franchise system and create a strong platform for future growth.

To prepare for this transaction, a restructuring of the Inter IKEA Group took place in May 2016. This divided the Group into one entity for the IKEA related business and a second entity for the investment business. Both groups have separate holding companies, boards and management. Inter IKEA Holding B.V. owns the IKEA related business and is referred to as the Inter IKEA Group. Interogo Holding AG is the owner of the investment business and a non-

controlling shareholder of Inter IKEA Holding B.V. Interogo Foundation is the controlling shareholder of both groups.

Inter IKEA Holding B.V. acquired IKEA of Sweden AB, IKEA Supply AG, IKEA Industry and certain other connected businesses from INGKA Holding B.V. for a total amount of EUR 5.3 billion. Inter IKEA Group now consists of three core businesses: Franchise, Range & Supply and Industry.

Franchise Inter IKEA Systems B.V. is the owner of the IKEA Concept and the worldwide IKEA franchisor. Inter IKEA Systems B.V. develops the IKEA Concept and ensures its successful implementation in existing and new markets. The IKEA Concept consists of the IKEA product range, the IKEA retail system and the IKEA trademarks. The franchisor offers this concept to IKEA retailers worldwide and enables the long-term fulfilment of the IKEA business idea.

The IKEA business model places the home furnishing offer in the centre with a strong connection to the way it is sourced and developed, as well as positioned and communicated to IKEA customers. Inter IKEA Systems B.V. granted assignment agreements as follows:

? to develop the IKEA product range and communication solutions connected to the range ? IKEA of Sweden AB

? to develop the IKEA Food & Beverage range ? IKEA Food Services AB

? to produce creative content connected to the range ? IKEA Communications AB

? to source, sell and distribute the range to certain IKEA retailers and other authorised distribution companies ? IKEA Supply AG.

These companies now form part of the Inter IKEA Group.

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